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Late bills? Schedule them to pay automatically

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Ann Hermes/The Christian Science Monitor/File

(Read caption) Hamm recommends scheduling payments on many of your bills in advance so that you don’t have to worry about paying them on time.

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As I mentioned yesterday, one of the big advantages of online bill pay is that you can schedule payments on many of your bills in advance so that you don’t have to worry about paying them on time. Online bill pay just fires them off for you at the correct time.

Of course, that really only works if you know the amount of the bill in advance. It works great for mortgage payments or car payments or insurance payments, but for many of us, our cell phone bill and electric bill and other bills vary a little (or a lot) from month to month.

For those bills, you can’t just type in an amount well in advance and call it good enough. You’ll either be drastically overpaying or, even worse, underpaying your bill.

Thankfully, many companies have a very useful solution already in place: automatic bill pay. 

To put it simply, you can authorize your electric company or cell phone company to automatically withdraw an amount equal to your bill from your checking account on or near the bill’s due date. Most service providers allow this, and it’s an incredibly convenient.

First of all, it saves you time. You can just glance at a bill when you receive it and, if it seems sensible, file it. No stamps. No checks. No logging onto online banking. It’s just paid automatically.

Second, it further reduces the chance of any late payments. Late payments can cause you to owe late fees and can have a negative impact on your credit report. With automated bills, you can’t be late any more.

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These two benefits alone add up to real savings, both in terms of time and money.

Some people have expressed concern about using such services and wondering about identity theft. Typically,the only information you provide when you sign up for this service is a voided check, and they already have your checks from your previous bill payment. You’re not providing them with any information the company doesn’t already have, in other words.

Another concern is that you need to make sure you keep a healthy checking account balance. If you let your balance get really low and then a bill is automatically paid for, you can easily overdraft. I maintain a minimum balance in my checking account and treat that level as essentially being zero; if I get below, say, $300, I react much as I would if the balance was $0 and I quickly strive to get more money in there. Overdrafting is an unnecessary expense for the prepared person.

Personally, I use both automatic bill payment through my online bill pay as well as automatic payments through my service provider to minimize my effort in paying all of my bills.

Try it yourself – you’ll find that it saves you both money and time throughout each and every month. That’s a reward well worth striving for.

This post is part of a yearlong series called “365 Ways to Live Cheap (Revisited),” in which I’m revisiting the entries from my book “365 Ways to Live Cheap,” which is available at Amazon and at bookstores everywhere. 

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